China’s HNA Group purchases ANZ’s finance business UDC in $460m deal

China-based HNA Group, one of the world's biggest asset finance and leasing companies, has purchased its first foothold in New Zealand with the NZ$660 million ($460 million) acquisition of asset finance firm UDC.

ANZ Bank New Zealand Ltd, the nation’s biggest commercial bank, said that HNA had agreed to buy its asset finance business. The deal, however, prompted an immediate fall in the credit rating of the country's biggest non-bank lender, which provides equipment financing to business customers in the New Zealand market.

HNA, which also owns Hainan Airlines Co, said that the deal offers significant growth opportunities in Australia and New Zealand and would also create synergies in its leasing business.

While in its latest asset sale, Shayne Elliot, chief financial officer of ANZ said that it would record a $100 million gain by selling UDC finance. UDC holds $NZ2.6 billion in gross loans in 2016, according to KPMG. Toyota Finance New Zealand with a distant NZ$777 million, is ranked second among the country’s financers.

ANZ New Zealand’s CEO David Hisco said the purchase price represents a price to book ratio of 1.6 times than the bank’s net assets of NZ$424 million ($296.46 million) as of September 2016. He further added that HNA is well suited to invest in specialist asset finance products and systems which would help UDC to expand its operations further in the future.

The deal has been agreed upon by both the sides but is subject to some closing steps and regulatory approvals, as its completion is expected late in 2017. In the deal, ANZ is forecasted to lose revenue of around $NZ59 million per year, which is lesser than 1 percent of its total earnings.

HNA Group was founded in 1993 and has evolved from a regional airline based in China's Hainan Island into a global conglomerate with assets worth $90 billion and more than 200,000 employees across Asia, North America and Europe.

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